Boosting your company’s value

I became a Certified International Business Coach because I loved the idea of sharing the tools I find with other CEOs, as I do in this monthly Edmond Business column. Right now, I fly all over North America, helping firms of all sizes scale up their companies toward a strategic exit strategy. 

Last month, I covered the first five phases I like to help entrepreneurs through when they decide to sell their business in our July Scaling Up with Stacy column. Let’s continue with the final prep of selling your organization within the next 1-3 years.

I want you to go on a journey with me for Phase Six to learn how you could have a Rembrandt in the Attic that skyrockets your company’s industry sales multiple from 3x to 24x!

John’s Rembrandt in the Attic

Imagine for a moment that you’re not selling your business but, in fact, selling your family home.

• Buyer #1, “Lakeside Larry,” is obsessed with your home’s location, location, location. You’re right on the water, exactly where he loves putting in his boat to fish for largemouth bass every weekend, so he can’t wait to buy your home to fit his new retirement lifestyle.
• Buyer #2, “Kitchen Kathy,” toured your home with her local realtor and told her husband via FaceTime all about the gourmet kitchen appliances and how smoothly it would fit their large family every Thanksgiving and Christmas with very little to no renovations. She’s already picturing her family here enjoying their holidays, so she is also excited to make an offer on your home.
• But Buyer #3, “Attic Amy,” decided to take a little detour during the typical real estate tour. She asked to see the attic space, wondering if her new work-from-home lifestyle would allow her to build out a small, well-lit painting studio upstairs. Instead, she sees a hidden gem dusty in a dark corner. It’s a Rembrandt painting peeking out behind the rafters, and she knows she’s found a goldmine because the home is being sold “as is” with all furniture and accommodations included. Wow, what kind of offer is she willing to make to ensure she overbids to get this home?

Let’s say your home was listed for $1 Million. Lakeside Larry is trying to budget for retirement, so he logically offers right at $1 Million, as he doesn’t want to overshoot the price based on other homes in the area. Kitchen Kathy has her dreams set on holidays at the house, so she’s going to emotionally offer over the market price at $1.2 Million to ensure no one outbids her.

Attic Amy won’t allow anyone to get in her way of this Rembrandt painting that could be worth multi-millions of dollars. So, her bid isn’t based on “the market value” or the “listed price,” is it? Her bid is STRATEGIC. She knows she could place an offer of $2M for a $1M home and still come out on top.

The moral of the story?

When someone is buying your business, just like this home, they are looking for something that suits them. They could be looking logically at dollars and cents. They could be looking emotionally at crushing the competition. Or they could be looking very strategically at your organization fulfilling a key puzzle piece they currently lack.

Listen to the questions the potential buyer is asking of you as the seller. It may reveal what hidden Rembrandt in the Attic they see in your company. Knowing their angle could assist you and your M&A rep in valuing the sale at the largest, strategic multiple that works for both parties.

Phase Six

A Scaling Up business coach who focuses on building Strategic Exits for clients as I do has a wealth of worksheets, checklists, and resources available for your Phase Six – uncovering your Rembrandt in the Attic!

I like to start with these blueprint questions:

Strengths: What are the top company strengths that, even if a Vice President left the company, it would maintain as a core competency of the agency because it’s cross-trained, well-documented, and you’ve been great at it for years and years? Sometimes you’re so good at these strengths that you skip telling them out loud to your coach because you take them for granted. If a buyer could buy this strength, what would it be worth to them? Why?

Weaknesses: What are industry-based weaknesses that are inherent to your product/service that all your competition has as a likely weakness as well that’s not easy for you all to make better without a ton of time or money? If a buyer already had a system in place to fix that weakness, how much upside could they financially see by owning your brand?

Trends: What trends are you seeing in the world that impact your business in the coming 1-5 years? How do those trends expand or contract the number of buyers or adjacent industries who may want to purchase what you do?

Inventory of Skills: What prior leadership experience positions you and your team well to pivot in times of emergency? Are these core capabilities as individuals – CEO, Leadership team, Specialized Talent Pool – going to go with the sale of the company, or could they leave and start a competitor brand during the sales transition?

Customers: Who are your top customers? Describe to me how they engage in the business. Which customers drive margin in the business? Who are you the hero to? Who else serves those same customers? What’s our sales process? Why do we serve our customers well?

Magic Wand: If you had $5M tomorrow, where would you invest in the business immediately? What future do you see potential buyers will value as an upside to purchasing your company when they will be investing their time and their money?

Potential Buyers: And last but not least, Rembrandts! Who did you view as potential buyers before this Rembrandts in the Attic story? Why do you believe each one may want to buy your organization? And now that you see your business could have a hidden gem like a Rembrandt in the Attic, did that cause you to think of even more potential buyers?

As an International Business Coach, it’s been my pleasure over the last several years to help entrepreneurs prepare to exit their companies. Email me to get a white paper on what to avoid when exiting: stacy@stacyeads.com. Or call me at 405-476-5873 to request a 30-minute personalized coaching session about the Six Phases of prepping for your strategic exit.

Happy to share the love with other like-minded entrepreneurs!